If you were to ask five consumers their top-of-mind issue when it comes to grocery shopping, you’d get six resounding answers of PRICE.  

The price of goods is on every consumer’s mind these days, as the price of food seems to perpetually increase, while consumer budgets stay the same. And as pricing pressure continues to rise, retailers are unsure how to proceed – the grocery market has become more complex and while they need to make a profit to survive, they don’t want to scare off shoppers with sticker shock at the register.  

Over the past decade, new and disruptive technologies have debuted in the market that rake in customer data to be crunched and analyzed and show retailers where they’re hitting or missing with consumers, especially when it comes to price. But these technologies, while beneficial in some ways, are not always terribly accurate and add a lot of pressure to already slim margins for retailers. 

An AI solution that works in retail

One of the main issues with today’s retail technologies is that they silo categories, rather than looking at them in conjunction with one another. And because of that, missed opportunities abound, because consumers are not solely buying single-use products; their carts consist of products that connect to other products that ultimately make up bigger use case, as in a meal (ie, ground beef, pasta, and tomato sauce to make spaghetti). Every product has multiple use cases associated with it, and with each new case, sales of other products have the potential to increase the basket as well, causing a halo effect.  

The technologies that grocery retailers have used in the past overlook these halos, and they simply can’t keep up with vast number of potential options retailers have to improve incremental salesThe right AI can.  

“AI takes over the directives and processes that have been historically in merchandising and marketing,” says Sterling Hawkins, CEO and Co-Founder of the Center for Advancing Retail and Technology. “And it’s not that their processes are wrong, but they’re based on what’s worked in the past. AI is looking forward.” 

In 2018, 28 percent of retailers had AI integrated into their organizational strategy. By 2035, it’s expected that 95 percent will be reliant on machine learning.(1) Grocery retailers can use AI to optimize the pricing in their stores, and it makes visible the halo effect that optimal pricing can have on sales. AI plays out each possible scenario and shows the prices retailers should put on which products on each shelf, or on which page of the store circular, driving the retailer toward success.  

AI is the way forward 

Using AI to price the total store mix of promotion and regular products can maximize total store sales and ultimately increase profit well beyond the capabilities of what people can doWhile it takes AI mere minutes to compute the billions of possible scenarios to determine the most profitable mix, it would take humans several lifetimes to do the same thing. Simulation allows for learning to happen faster than the pace of time. 

But AI isn’t just a useful tool for retailers to have in their arsenal. As the grocery industry continues to grow, and as competition continues to increase, AI is the cost of entry to remain competitive,” says Hawkins. It is transformative in its effectiveness, and gives retailers an invisible advantage—competitors and customers don’t know that pricing has been done by AI. And while retailers using AI to power their price mix are seeing as much as a 5 percent increase in sales with no additional markdown, competitors without AI can’t even come close to those numbers.  

For retailers, implementing AI into their strategy is a need, not a want, to be competitive in today’s market. And from there, the next step is to look at how to bring this technology into the culture, and develop the organization around it to realize the gains in the market.  

AI is ready to change you. Are you ready to lead change? 

To learn how to bring your AI vision to life in retail, read our blog here.  


  1. https://www.roboticsbusinessreview.com/retail-hospitality/infographic-the-emergence-of-ai-in-retail/
Halo Effect eBook download

Recent Blog Posts

Sign up to receive our newsletter

Copyright © 2022 Daisy Intelligence Corporation - All Rights Reserved